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Washington Times on Democrats’ New State Bailout

WASHINGTON, D.C. | June 22, 2010 -

Democrats’ internal feud about whether to add a $50 billion state bailout to the nation’s credit card continues to delay vital troop funding. Meanwhile, The Washington Times reports this morning on the president’s proposal to prop up over-inflated state budgets – including a $23 billion fund sought by teachers’ unions – suggesting yet another federal bailout will only delay state efforts to balance their budgets.

Stimulus aid to states seen delaying 'day of reckoning'

Spending spree in boom years cited

By Patrice Hill
A debate is raging over whether stimulus funds are actually helping states weather the recession or simply enabling them to postpone matching a record drop in tax revenues since 2007 with badly needed spending reforms and cuts.

President Obama wants to provide the states with an additional $50 billion in health and education funding, on top of $135 billion in such stopgap funding provided in last year's $862 billion stimulus bill. That amount, which the president insists is essential to prevent the layoff of thousands of teachers, police and firefighters, would plug about 40 percent of an estimated $125 billion in budget gaps the states collectively face this year. …

But while lingering unemployment continues to weigh heavily on state budgets, analysts say most states also have failed to recognize and deal with the fact that the nearly 10 percent drop in revenues they experienced during the recession will not be fully recouped any time soon, and they will have to find ways to bring spending in line with their reduced revenues. …

According to the National Association of State Budget Officers, state spending grew by nearly 60 percent to $1.5 trillion between 2000 and 2008, a period when revenues came flooding in, particularly as a result of the housing boom.